The Values Advantage: Communities of Practice Inside Out Brian P. Hall HP Seminar April 25 2003 The twenty-first century is going to be about creating pathways to a sustainable Future. Creating a shared understanding of what data, information, knowledge, and wisdom mean to us, and how they interrelate to enable us to define and move along those pathways. This means applying a model of knowledge architecture from the position of values, principles and beliefs which will allow us to evolve to a deeper understanding of what a sustainable future could mean to us and how we can pursue it. Prasad Kaipa, 1999 Communities of practice are the shop floor of human capital, the place where the stuff gets made. Brook Manville, Director of Knowledge Management at McKinsey & Co., defines a community of practice thus: "A group of people who are informally bound to one another by exposure to a common class of problem." Most of us belong to more than one, and not just on the job: the management team, the engineers, some in your company and some not. The Invisible Key to Success, Fortune Magazine, August 5, 1996, Thomas A. Stewart Brief: All modern companies are about Knowledge Creation. Critical to the agility, productivity and creativity of communities of practice are the human relationships that hold them together. The more productive and agile the group, the more this translates into value for the company. What is not always understood is that human relationships are under pinned by values priorities that can make or break the capability of the community of practice. The seminar will examine how values and values measurement can improve personal relationships, group effectiveness and customer sensitivity. Values and employee behavior as internal branding will also be discussed. Introduction: Knowledge and Community This paper is set within the context of knowledge management and communities of practice. The two are intricately connected. They are bound together by human relationships. It is the relationships between people that make any organization succeed or fail. These relationships are held together by the values people hold in common this is the Values advantage. When we look at the emergence of human community we note several interesting breaking points. First as intelligent reflective beings we are brand new in the history of evolution. Earth is about 4.5 billion years old. About 100,000 years ago we were more animal that human, primarily nomadic and communicating when necessary for mutual survival. See diagram: Phases of Human evolution. This Phase I experience came with a limited and dominant set of values, such as self-preservation and survival. Phases of Human Evolution Phases ERA Phase I NOMADIC PERIOD 100,000 years Phase II Phase III Phase IV FARMING TO KNOWLEDGE & GLOBAL CITY STATE SCIENTIFIC PARTNERING PERIOD ERA 7,000-500 years 500-present Present- Future Self Preservation Family Values Security Heirarchy Survival Communication (wiriting/books) 2 Knowledge/Insight Listening/Trust Search/Meaning Human dignity Interdependence Truth Empowerment Human Rights About 10,000 years ago in the Middle East, in what is now Iraq and Israel, a new form of grain appeared (Bronowski). Rather than sprouting seed that would blow across the plains producing a grass-like effect, the new grain required planting by human hands, and produced the edible product we are aware of today. The consequence was that the nomad could stop wandering the globe, remain in one place as a community and farm. Farming implied living and working in one location, changing the nature of relationships and human organization. By 5000 years ago substantial communities appeared creating cities and Kings. The city and the city state appeared and a new possibility for human relationships occurred. Shared information now became a natural part of living together. Highly developed language and a way of transferring knowledge from one generation to another became essential. The Phase II experience began to emerge and remained influential until 500 years ago. At first, written language was limited to accounting systems for recording property and wealth of the privileged royalty and a few merchants. Language as we understand it came much later after much experimentation. However, about 2,800 years ago the Greeks invented a simple language of 26 letters that included all the consonants and vowels ancestor to modern English via Latin. This was a magnificent accomplishment making literature, democratic learning, and cross-generational knowledge transference through libraries, letters and books all possible. It was the springboard to the modern era. Just 1000 years ago hoards of monks transferred knowledge by arduously copying all the manuscripts they could find, Eventually, barely 400 years ago printing presses were invented, making newspapers, and knowledge through thousands of books available to those who could afford to buy them. The Phase III experience was being born. COPY EXACTLY 3 Knowledge brings power. Hence writing brings power to modern society, by making it possible to transmit knowledge with far greater accuracy and far greater quantity and detail, from more distant lands, and more remote times. Jared Diamond, (p.215) 1998. About 20 years ago Alvin Toffler, in a groundbreaking book called Future Shock (1970), pointed out we were in the knowledge era. He noted that all of the knowledge that humanity had accumulated from civilization s first records up to 1900 was doubled by 1960 and would be doubled every 10 years after that. Of course, what was not clear is what knowledge was was it wisdom or simply masses of data and information that we need to sort through. What was clear is that we were now well under the influence of the knowledge era. The Group Dynamic Connection The last half of the twentieth century added another dimension to the picture. One of the most researched and understood social realities is the small group. The study of group dynamics and its invasion into psychotherapy, sensitivity training, encounter groups and high performance teams entered into our consciousness between 1945 and the 1980s. What we learned is that the quality of the relationships of individuals in the group alter the output of the group. In fact what was discovered is that the higher the interaction quality within the group the greater was individual and group learning about itself and whatever issue they were exploring. But something additional was going on in the last 25 years that would reshape how we think about knowledge. Parts of the society were entering into the Phase IV Experience. Several factors were beginning to reshape how people relate to one another forever: Satellite technology and its effect on media, made global events immediate and visual through modern television. Suddenly the majority of human persons witness suffering, joy and tragedy as it happens anywhere anytime. In addition, mobile telephone technology made local and global communication more immediate and direct on a one-to-one basis. 4 Advances in our understanding of human psychology and intimacy in communication increased expectation of equality, partnering, marriage and teamwork. A new benchmark was set for many around corporate ethics, honesty, transparency and cross-cultural interpersonal communication. All these interpersonal factors have changed the way we view relationships. The emergence of the personal transportable computers in the early 1980s and the Internet within the last ten years took all this into another dimension. Now you can talk to anyone, anyplace, one-on-one and even in chat rooms and teams. Even national boundaries, let alone diverse culture, are transcended in this new reality. Communities of practice became virtually possible. The twenty-first century trend is smarter together. Smarter teams are the cells of larger intelligently networked organizations. Ignite intelligence and we change the world. (Introduction to Virtual Teams. J Lipnack and J Stamps. 2000) In 1995 Inkujiro Nonanka and Hirotaka Takeuchi wrote an important book that gave the new movement of knowledge management fresh impetus in a work called The Knowledge-Creating Company. They pulled all of these trends together, connecting the community of practice with the knowledge-creation experience as follows: In a strict sense, knowledge is only created by individuals. An organization cannot create knowledge without individuals. The organization supports creative individuals or provides contexts for them to create knowledge. Organizational knowledge creation, therefore, should be understood as a process that organizationally amplifies the knowledge created by individuals and crystallizes it as a part of the knowledge network of the organization. This process takes place within an expanding community of interaction (community of practice), which crosses intra- and inter-organizational level and boundaries. (1995, p50.) In conclusion, knowledge emerges from individuals, but individuals in interaction with one another, in communities of practice. Communities of practice are groups of people 5 minimally 2 and a maximum of 25 people for optimal performance, who share a common concern, and purpose, and who deepen their understanding and knowledge of this by interacting on an ongoing basis either face to face or virtually. However, what became rapidly evident to Nonanka, Takeuchi and others is that knowledge management can mean many things, from data sharing and scheduling tasks at one end of the scale to creating new ideas and solutions or discovering new technologies at the other end of the scale. So for them the critical issue is Knowledge Creation it is this aspect of knowledge management that will make a company like HP sustainable and ahead of the competition. What has become evident is that the quality of knowledge creation, and even its occurrence in the first place, depends on the quality of the community of practice. This is the missing third dimension. The diagram The Knowledge Creation Triangle illustrates this point. The Knowledge Creation Triangle Knowledge Product Values Relationships Communities of Practice At a practical level there appears to be three dimensions of knowledge creation: 1. The quality of relationship underpinned by appropriate values. The explicit values orientation -- a values set that builds integrity and cohesion among the members of the community. 2. The focus of the community of practice around the values held in common by the group. 3. The explicit knowledge product or solution that evolves from the community of practice. 6 What must be understood is that all human relationships are underpinned by values. Values hold any human relationship together, whether it is a marriage or a community of practice. The values determine the quality of the relationship and what the outcome of the relationships will be. The Values-to-Value Connection Knowledge management can imply simple sharing of information through an IT network at one end of the scale and Knowledge Creation at the other end. However, in the long run it is Knowledge Creation that really matters. It is new knowledge that flows from a community of practice, producing new ideas, new products and new solutions that gives the company the competitive edge and leverages it into the future. Values Creating Value Personal Values Meaning Valuing Building Relationships Teams ValueAdded Knowledge Creation Working Together Knowledge In the diagram: Values Creating Value we see the Values-to-Value chain. 1.) The lefthand side of the diagram begins with the individual. At the outset all knowledge flows from individuals and is determined by their values priorities, the values that give meaning to that individual s activity and work. 2.) Teams and communities of practice are based on relationships that are built through a common values system. When this is productive and the appropriate values are in place the value added becomes the creation of new knowledge, which 3.) in turn increases the values of the firm. However, the difficulty is that our values are 90% unconscious. So it is when they are made explicit that the 7 learning, the relationships become more meaningful. The way this occurs is though values measurement. Values, Measurement, and Personal Phases of Evolution What writers like Paulo Freire understood and what I discovered over and over again in 30 years of research is that human values are embedded in the language, motivating and driving our behavior. Altogether there are 125 values that provide the basis for a technology that measures those values and makes them explicit. Corporate culture is human and therefore flows from a set of relationships -- the relationships that form the environment from which all decisions flow, including ethical and moral choices. Why? Because all relationships, conscious or not, ARE UNDERPINNED BY VALUES PRIORITIES HELD IN COMMON. It is the collective priorities that form the basis for all decision making -- it is that simple. What is interesting is that values are measurable and so, by extension, is the capacity and efficiency of a team or group. The diagram: What Values Are clarifies the relationship between values and behavior. Values are priorities that we have that underpin our behavior our emotions, beliefs, ideas and decision making. These external expressions all flow from values each of us has. This value system is critical because it is what gives meaning to our lives -- it is what energizes us and empowers us through the stories we tell. What Values Are The Individual Ideas Emotions VALUES Behavior 8 Our internal values cluster as priorities and form our attitudes and beliefs. In the following table there are two columns of five values the same five values but in a different priority order. Clearly the beliefs of a person in column A are different from those of column B even though they have the same values. The difference is in the priorities. Column A Column B Family/Belonging Education Security Self Competence Economics/Success Economcs/Success Self Competence Family/Belonging Education Security Column A has priority beliefs around Family and its Security and financial sucess, where Education is the consequence or prize. Column B is quite different and has a focus on Education and Competence as a basis for the Security of the family. The cause and effect in both columns is different. One column or person is not more important than the other simply an expression of two sets of beliefs based on different values priorities. We are usually aware of what some of our beliefs are, but not what the values are that underpin them. We say therefore that our values are tacit or partly hidden. Yet at the same time our values drive our lives. All relationships, personal and team, are based on a minimal set of commonly held values priorities. Since values priorities are measurable, they are the glue that facilitates creative relationships. Therefore, values measurment is very important because it makes our priority values explicit and puts us in control of our decision-making processes. Measurement A ten-year development and validity process yielded two types of values measurement tools used with individuals and communities of practice: 9 1. Individual Reports. These are reports that an individual receives after completing a 125-item questionnaire. The person sees what his or her values are, in priority order, and what the implication is for his or her leadership and personal development. Several thousand skills are coded to the values, allowing a person to convert the values into specific capabilities. 2. Group Reports. These are reports on the value priorities of small or large groups. Group reports are used in a wide range of circumstances from team development to mergers analysis. 3. Finally a composite of all these measures is used for team assessment and development. When a person in leadership becomes explicitly aware of what their values priorities are, and what the values are of a group or team they work with, this increases their awareness about who they are and how they are different from others. This in turn increases their confidence to make more decisions even when the risks are greater. Furthermore, values and the evolution of a team as a knowledge creation entity are connected. That is to say there is a relationship between the maturity of person on a team and the level of knowledge creation they can accomplish. A key component to understanding this dilemma is how values evolve. The Values Connection At the beginning of the paper we talked about how human beings have evolved over the last 100,000 years through four phases. This same journey occurs for each individual, altering the way they communicate, understand knowledge and what values drive their day-to-day behavior. After the 125 values had been unearthed in the early 1980s, it became clear that the values clustered into distinct developmental levels or phases for each individual. The Diagram Phases of Evolution shows how each Phase reflects its own world view, and illustrates how knowledge is understood and what the values are that underpin this 10 reality. The staggering implication is that as a people mature in their values so their world view alters. That is, their perception of the world and, critically, how they view knowledge and decision making, are developmentally determined. Phases of Evolution, Knowledge and Values 4. Knowledge as Understanding and Wisdom as practical know-how in a global context. Relationships are collaborative, forming partnerships to create new solutions and co-equal alliances COLLABORATIVE PARTNERING SOLUTIONS Learning & Way of Relating to Learning & Way of Relating 3. Knowledge is Understanding information adapting it in flexible ways. Relationship is focused on tailored solutions. Listening adaptively is the criteria. CUSTOMIZED SOLUTIONS 2. Knowledge is Information: Relationship are Known & un-ambiguous PRE PACKAGEDSOLUTION 1. Knowledge is Data Relationship is Òsingle Solution Ó TRANSACTIONAL SOLUTIONS Profit Survival Self Preservation Self Worth Competence Peer Support Admin./Control Management Economics/success PHASE I Survival PHASE II Belonging Learning Integration Knowledge/Insight Empathy Sharing/Listening Trust Decision/Initiation Stewardship Collaboration Community/support Mission Objectives PHASE III Self Initating Truth/Wisdom Teaming Synergy Interdependence Empowerment Human Rights Convivial Technology Macro-economics PHASE IV Interdependence 1. In Phase I the World View is one of Survival, with values like Profit and Self Preservation and Security. (See Hall-Tonna Map 2002 in the Appendix for a full list of the values.) Knowledge is simply data, where the community of practice would function at a transactional level only for simple task assignment and scheduling. Relationships are seen as transactional only I give you what you expect and in return you give me what is due to me. Relationships are very limited with very little personal sharing or trust. 2. In Phase II the world view is doing what is necessary to belong to the group. Knowledge is packets of data or information presented as packaged solutions. The team functions, by applying past practices and experience to solve new problems. The person is not going to speak up in a group except on issues they feel very secure about. This person would listen to a customer s needs and try to find the right product 11 for them. A tailored solution would be out of the question. At a personal level, belonging, being accepted and knowing who is in charge would dominate the relationship. 3. In Phase III the world view is more complex. It is now internalized to become selfinitiating and service oriented. It is underpinned by values such as learning, listening and trust. It is a collaborative perspective. Knowledge is understanding. The community of practice is characterized by its ability to create new, innovative and tailored solutions. Therefore relationships are based on trust, transparency and cooperation. 4. In Phase IV the world view has to do with global partnering through Interdependence. Knowledge is practical global wisdom where relationships are co-partnering or cocreating an entirely new product and services. The community of practice functions at the same level of creativity and transparency as it did in Phase III, but operates globally and is most often virtual part of the time. All four Phases are underpinned by different values. However, it is also important to realize that people functioning at these levels do so tacitly - they are not fully conscious of how it is they are doing what they do. The reason is that we function on habits and we internalize our values and capabilities. We now have a technology that measure values and can make these processes explicit for a person. When this occurs we are able to choose to function at much higher levels. This is particularly critical for communities of practice at Phase II wanting to move its capability to higher levels. What we have in the modern global reality are teams needing to emphasize knowledge creation that is a Phase III phenomenon. The difficulty is that at these levels of functioning, the values of the team need to be made explicit. What is happening is that different parts of organizations are operating at different levels, reducing their performance to the lowest common denominator and hemorrhaging the bottom line. The technology being introduced in the following case has the specific purpose of making the values explicit, causing the relationships and knowledge processes also to become 12 explicit. This gives leadership the leverage it needs to align and move the organization to much higher levels of functioning and integrity. (Saint-Onge and Verna Allee, 2003.) Evolution and Measurement Seventeen years of research and development at the University of Santa Clara by a group of international associates gave significant results in values measurement. First, the four Phases were expanded into eight stages of evolution, as the diagram Phases and Stages of Values Development illustrates. (See Hall-Tonna Values Map in the appendix.) Within the 125 values, 29 are goal values. Goal values are future oriented and contain human purpose. These values form a natural track or path, so that Human Dignity in stage 6 is incomplete in its impact and understanding by a person if the Stage 1 and 2 values such as Self-Preservation and Security are not in place. Phases and Stages of Values Development Phase Stage I 1 I 2 II 3 II 4 III 5 III 6 Being Self Human Dignity Ethics Truth/ Wisdom Global Harmony Synergy Human Rights Innovation Interdepe ndence Goal Values Self Preservation Security Self Worth Self Competence Integration Means Values Food/Shelter Economic Profit Courtesy Achievement Empathy Affection Friendship Education Certification Search /Meaning IV 7 IV 8 There are also 96 means values that are underpinned by skills. In the Hall-Tonna format approximately 1000 skills underpin 96 means values. Healthy personal development requires that means values always be related to goal values in an effective combination. Each of us has values, which are foundational, partly derived from our family or experience of origin. When the family is healthy they keep us stable and secure for much of our lives. We also have values that pull us from the future and drive our meaning system. It is the basis of our vision or a corporate vision. The diagram Phases and Stages of Values Development reveals an evolutionary or developmental path underpinned by 125 values that fall into four Phases and eight stages of development, and is the basis for measurement of gaps in priorities and world view. 13 For example, in a conversation between two people, if one is functioning at stage 4 in the above diagram and the other is functioning at stage 6 there will be a gap of two stages. But the point is their values priorities will be different: the person at stage 4 is concerned abut Self Competence whereas the person at stage 6 will have transcended that and is concerned about Being Self and issues around Human Dignity. Values Tracking and the Quality of the Community From 1990-2002 Values Technology worked with several global organizations at a multilanguage global level. This case is a composite of our findings and approach, using the values measures outlined above. In each of the organizations, we worked with teams with the mandate to create a new team identity based on values consensus. All the employees filled out values questionnaires to create a database. This was managed in several languages, including Asian and European languages. The measurement instrumentation used was the values metrics explained earlier; the measurement used individual and group assessments. The comparative measurement is the " Value Scale" illustrated below. As discussed above, the measurement consists of the four Phases and eight Stages as follows: Phase Stage I 1 I 2 II 3 II 4 III 5 III 6 IV 7 IV 8 What we have discovered by using this scale with global organizations during the last 10 years is that when two people are communicating with each other and there is a gap in levels of more than two stages, the level of mutual understanding is about 20%. For example if a person at stage 3, Phase II is talking to a person at Stage 5, Phase III (or later) there can be as much as 80% loss of information. Basically their values and world views are quite different. It happens in marriages, it happens in leadership teams and it happens with customers. When this situation occurs in communities of practice, transmission of knowledge and understanding at any stage can be less than 20% efficient. 14 For example a person at stages 5/6 trying to solve a customer problem is going to view the issues as requiring a tailored and collaborative response. Listening actively, openness to new solutions, trust and transparency are going to be uppermost in the relationship. On the other hand, if the customer is at stages 5/6 as we have described and the company representative is at stages ¾, the experience will be quite different. Here task is first and relationship and trust second. The person views solutions as packaged based on past successful formulas of how things should be done. The person is not open to new solutions and is not open to collaborating on new approaches. It is apple and oranges communication. Both parties end up being confused, not realizing the differences are developmental both parties are coming from different values stages, world views and ways of relating. What we have also found by document scanning of advertising and similar forms of communication such as form letters to stockholders is that similar problems of communication gaps occur. Finally, we have conducted large surveys in most regions of the world. The same problem is evident, except that language and cultural differences exaggerate the gaps even more. All of this has led to a better understanding of what values consensus means in complex organizations. Conclusions: Conversation and Communities of Practice A simple definition of values is that they are what drive, motivate and empower us through the stories we tell. Values are the heart of what human conversation is about in any social situation, but particularly in communities of practice. By making the values priorities explicit and sharing those values with a partner or in a group make the individuals involved aware of their similarities and differences. The following process has evolved over the pat several years to leverage the similarities and bridge the differences in order to maximize the quality of the team or group a given community of practice. Members of the group or community fill out online questionnaires as referred to above, that are placed into a database. 15 Coaching is carried out with members of the team, comparing personal profiles with the group analysis of the whole community. A gap analysis is carried out so that the team can see where the polarities and differences are. The purpose here is to make the values conscious and explicit to everyone involved. The group now comes together to share common values and differences. Because they are all sharing out of a common set of 125 values a common language and focus begins to develop. This results in a vision and purpose statement. Part of the process is to guide the membership of the community of practice in deciding what beliefs it needs in place to produce excellence. They choose from an initial selection of 100 beliefs, also called paths of integration, illustrated in the table Beliefs and Paths of Integration. Beliefs and Paths of Integration Business Processes People Processes 1. Technology 15. Art/Design 2. Financial Services 16. Human Relations 3. Communications 17. Health Care 4. Management 18. Leadership 5. Research 19. Empowerment* 6. Hospitality Services 20. Emotional Intelligence 7. Manufacturing 21. Trust and Respect 8. Business Success 22. Partnering 9. Profitability 23. Teamwork 10. Sales 24. Learning Organization 11. Commercialization 25. Knowledge Management 12. Business/Sustainability 26. Pioneerism/Innovation 13. Operational Excellence 27. Personal success 14. Speed and Agility 28. Leisure Track Brand Promise 29. Customer/Service 30. Customer Intimacy 31. Customer Passion* 32. Environment 33. Stewardship 34. Corporate citizenship 35. Social Consciousness 36. Quality 37. Safety 38. Confidentiality 39. Security 40. Partnering/alliances 41. Integrity/Ethics 42. Ethics Baseline The values track, or paths of integration, vary with the organization. Tracks are a string of values encompassing all eight stages of evolution or development as illustrated in the three tracks below. However, our research demonstrates that there were three tracks held in common by almost all Communities of Practice: Teamwork, Learning Organization and the Customer. We note that the tracks are underpinned by a selection from the 125 values illustrated below. Teamwork Security Family Self worth Philosophy Integration Equality 16 Construction/ New Order Truth Word Support/Peer Communication Ownership Membership Institution Decision/Initiation Authority/Honesty Sharing/listening/ Trust 17 Human dignity Collaboration Community/ Supportive Complimentarity Community/ Personalist Synergy Interdependence Learning Organization Security Self Worth Wonder/ Curiosity Control/Order Discipline Competence Confidence Education Self Actualization Search/ Meaning/Hope Limitation/ Acceptance Knowledge /Insight Limitation/ Celebration Education/Knowl edge Truth/Wisdom Customer Security Wonder/ Curiosity Family Care/Nurture Support/Peer Friendship/ Belonging Competence/ Confidence Responsibility Ownership Service Adaptability Generosity/ Compassion Sharing /listening/trust Human dignity Presence Mission/Objective Mutual Accountability Stewardship Truth Word Interdependence If the community of practice is to function at a knowledge creation level of performance it must be overall at Phase III or a minimal Stages 5/6. The measured organization is an organization that views collaboration and partnership as a preferred way of doing business. It is the minimal requirement for sustainability to be a learning organization and an organization with high transparent ethical standards. Coaching individuals and values development in the group make this possible. Once the values have been made explicit in the manner explained above, consensus becomes the recognition by the leadership group of what Integration Paths are essential to make the community of practice successful. This involves looking at the values definition in, for example, the team track and converting the values into agendas, operation principles and expected behaviors of the community. The values track is what allows the organization to convert the track, such as Team work, into behaviors. Each value has a standard definition and a list of skills related to it. The point of the exercise is that the tracks take into account the developmental level of all the employees. Therefore it is not necessary for everyone in the team to be functioning at Stage 5/6. But it is a requirement that leadership function at this level. Also it is noted that these tracks, sometimes called business principles, have a dynamic relationship. The endpoint for most of the organizations is customer service, which is accomplished through empowered team members in a learning organization. 18 Conclusion: Internal Branding What has to occur in the long run is that all employee behavior needs to be minimally aligned with the values in all the tracks this is what creates a different conversation in the organizaton around a single cultural identity. What this implies is that there are two or three tracks in common for the whole organization, and some that are unique locally, as is the case with communities of practice. The more the employee behavior is aligned around the tracks and particularly the three tracks of teamwork, learning and customer the greater the affinity to the customer. The declared values of the company are more and more in alignment with the promise to the customer. It is the ultimate win-win situation and what we call Internal Branding. It is the natural end process of everything described in this paper. In order for the lnew cultural identity of the organization to be activated, the following processes also have to be in place: The employeees by looking at their own values are able to see how they score on each of the values tracks what values are absent or weak and which ones are stong. Putting the results into an annual action plan, reviewed by management in what was called the development dialogue is the way the values tracks were behaviorized that is to say the employees and executives must walk the talk. 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